New Zealand has announced it will impose a digital services tax on multinational companies from 2025 following delays in talks for the global rollout of international tax rules at the Organisation for Economic Cooperation and Development (OECD).
New Zealand is seeking a 3% levy for multinationals that earn more than US$812 million annually from global services and make more than US$2.1m a year from digital services in New Zealand.
The global tax accord was agreed upon in full in 2021. The accord aims to designate how, where and how much multinational companies are taxed. OECD talks in Paris last month agreed a one-year delay in implementing the first phase of the tax accord, to 2025.
New Zealand’s legislation is tabled for later this week and will be enacted if the OECD process does not go to plan.
“We don’t think it’s fair that everyday Kiwis pay their fair share of taxes but there’s no tax liability for large multinationals,” said New Zealand’s Finance Minister Grant Robertson in a statement.
“The proposed digital services tax will target large multinational businesses that earn income from New Zealand users of social media platforms, internet search engines, and online marketplaces.”
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The proposed legislation could generate around NZ$222m over four years, Roberston said.
Efforts in recent years to create a global corporate tax system have failed to gain traction. This has led some nations, including the UK, to implement special taxes on digital services.
In April 2020, the UK launched its Digital Services Tax, which subjects search engines, social media platforms and online marketplaces that make revenue from users in the UK to a 2% tax on those revenues.